WASHINGTON — A bill introduced Wednesday in Congress would extend a tax break for homeowners who obtain mortgage modifications or complete short sales for their homes.
The Mortgage Forgiveness Tax Relief Act would continue the law that waives taxes on mortgage debt that is erased when a troubled homeowner receives loan assistance.
The tax break, which was created in 2007, is good until the end of this year. Before the original law was passed, the IRS considered any loan forgiveness to be “income” and taxed it as such.
The new bill by Sens. Dean Heller, R-Nev., and Debbie Stabenow, D-Mich., would extend the tax break through 2015.
“If Congress does not act this year, then thousands of Nevadans who are underwater in their homes will be forced to pay a tax at a time when what they need is some relief,” Heller said.
Contact Stephens Washington Bureau Chief Steve Tetreault at firstname.lastname@example.org or 202-783-1760. Follow him on Twitter @STetreaultDC.